Trump-led SPAC wins SEC settlement for misleading investors

A SPAC merger tied to former President Donald Trump's media arm continues to face setbacks since it was announced in October 2021.

Here is the latest.

What happened: A merger between Donald Trump's Trump Media & Technology Group and Digital World Acquisition Corporation DWAC has experienced several delays in its approval and merger vote date since its announcement.

On Thursday, the U.S. Securities and Exchange Commission (SEC) announced that it has settled fraud charges against SPAC related to material misrepresentations made to investors.

SEC found that Digital World Acquisition Corporation misled investors by failing to disclose that it had previously discussed plans to acquire the Trump-led media company before going public.

"DWAC has not disclosed its discussions with TMTG and has not disclosed a material conflict of interest of its CEO and Chairman," said Gurbir S. Grewal, director of the SEC's Enforcement Division. "In the context of a SPAC - a 'blank check' entity with no business operations - these disclosure failures are particularly problematic as investors focus on factors such as SPAC's management team and potential merger targets when making financial decisions."

The SEC and DWAC have agreed to an $18 million fine if the merger goes through and a cease and desist order. All amended S-4s filed by DWAC will include full accuracy under the terms of the agreement.

Related link: Donald Trump faces third indictment, will it impact his 2024 electoral chances

Why it matters: DWAC previously filed an amended Form S-1 in September 2021 which stated that the company and none of its officers had any discussions with any company about a merger before SPAC went public.

SEC found amended S-1 form false and misleading.

The latest SEC filing follows multiple parties related to the SPAC merger between Trump Media & Technology Group and Digital World Acquisition Corporation accused of insider trading.

DWAC Price Action: Digital World Acquisition shares rose 27.02% to $16.91 in after-hours trading Thursday.

Read next: Trump SPAC deal includes presidential race and jail terms

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